Data released today showed a significant decline in consumer confidence in June. Analysts at Wells Fargo point out that even with this deterioration, confidence is still elevated by historical standards and noted the fallout in June is likely attributable to concern about the trade war and an indication of vulnerability in the labor market.
Key Quotes:
“Consumer confidence was shaken in June falling almost 10 points to 121.5. The consumer is still on track for a solid outturn in Q2 but unless confidence is restored, consumer spending in the second half is poised to slow.”
“Some retrenchment was expected, but today’s consumer confidence report instead showed that amidst an ongoing trade war and a soft May jobs report, consumers were downright shaken. The 9.8 point drop is the largest monthly decline since 2015. From the initially reported print of 134.1, the decline was 12.6 points, the biggest monthly drop since 2011.”
“The threats about a new front in the trade war with Mexico consumed the news cycle in the first week of June. Although that already feels like history, the second half of the month included more geo-political worries with the downing of a U.S. drone in Iran and fresh sanctions against the Iranians in response. So to the extent that consumers are worried about an unsteady global growth landscape, there are no signs of that abating at present.”
“It would be too soon to mark-down spending estimates for the second half; but if past patterns hold, without a turnaround in this series, job growth could slow in coming months.”
“We are forecasting a 2.9% rate of growth in personal consumption expenditures in the second quarter. Today’s report of wilting confidence in June does not change that. Retail sales have already been released for April and May (two out of the three months for the second quarter) and suggest that barring an awful month for stores in June, spending is already on solid footing for the period.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.